DJ
Most USworkers have the following deductions from their wages, based on an income ofaround $50,000, which was the national average in 2009
Federal Income Tax Basedon income: goes from lowest at 10% (up to $17000 for a family) to 35% (above $374K)
State Income Tax Approx4.2% here in Michigan,varies state to state. Some have no state tax but charge higher sales taxes,some are a flat rate, some are incremental based upon income level
FICA (FederalInsurance Contributions Act) Tax 6.2%on the first $110k you earn
Medicare Tax 1.45%
City Tax Some cities charge a tax to their residents or workers - Detroit (where I live close to is, I think, 2.5%)
Other deductions
Retirement plan deductions voluntary,but most employers in the USdo not provide a pension plan and the government one (Social Security) is ajoke and most likely will be bankrupt in 15 years
Health Care premiums Upuntil now there is no government supplied medical care for most Americans soemployers provide it. Some cover all the cost but most require the employee topay a portion of it – mine is around $140 per month for my family, which I amtold is mid-range
That’s the pay check deductions. Then there are:
State Sales tax
Every state is different
Highest is California,which is 8.75%
Lowest is 5 states that have no state sales tax (Alaska, Delaware, Montana, N. Hampshire and Oregon)
So here in Michigana person on the median income would pay
Fed 15%
State 4.1%
FICA 6.2%
Medicare 1.45%
Total 26.75%
Sales tax is 6%, by the way, but not on everything (unprepared food is exempt, for example)
We are taxed lower than the UK, but its all relative. The countries with the higher tax rates tend to supply more services than the ones with the lower ones. In the UK everybody expects the government to supply everything, like for example, health care.
In the US most people have to supply these things for themselves (like through employment benefits), but the tax rates are lower so its a trade off
Either way, taxes are too high in both places as the governments are the worst money managers in the world. If they ran a business like they run the country it would go under within a year (both places - and I can say that having lived in both)
Hope that explains it a little clearer
People who live here please correct me if I am wrong as I usually am